FEDERAL COURT OF AUSTRALIA

Perre v Apand Pty Ltd [2004] FCA 1116

FRANK PERRE & ORS v APAND PTY LTD & ORS

SG 28 OF 1994

SELWAY J

19 AUGUST 2004

ADELAIDE

THE COURT ORDERS THAT:

1.           That the application made in the Notice of Motion dated 17 August 2004 seeking an order that I disqualify myself be dismissed.

2.           The question of costs is reserved, noting that the interveners do not seek orders for costs at this stage, and the State of South Australia does seek an order for costs.

3.           On the assumption that I have made orders from which an appeal can be brought, the first to eleventh applicants have leave to appeal from those orders on such grounds and in such terms as they shall be advised.

4.           Liberty to apply.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     By Notice of Motion dated 17 August 2004 the first to eleventh applicants (‘the applicants’) have requested that I disqualify myself from further hearing this matter.  For the reasons given below, I decline to disqualify myself and dismiss the application.

2                     The factual background to the litigation is set out in my reasons in Perre v Apand Pty Ltd [2004] FCA 881.  As can be seen from those reasons, over the last 18 months or more there has been a continuing dispute in this court as to whether RISU Nominees Pty Ltd and the various lawyers, partnerships and companies which it purported to represent was entitled to a lien in relation to the legal fees it claimed were due to it and them.  That question has been hard fought.  It was listed for hearing twice.  Each of those hearing dates was vacated close to the hearing date upon the making of consent orders.

3                     In those proceedings no issue was raised that RISU Nominees Pty Ltd was not entitled to claim legal fees.  No issue was raised that the retainer contract was invalid, although a number of issues were raised in relation to those contracts.  As I say, those proceedings were finalised by consent orders.  In particular, order 4 of the orders made on 18 December 2003 was:

‘By consent, the Court declares that the Interveners Risu Nominees Pty Ltd (“Risu”), John Andrew Morcombe, John Sheahan and Richard Dunstone Townsend (together with Ian Charles Phillips,, Townsends & Reynolds Pty Ltd and Peter Maine Allen) have a lien or liens over the fund at present comprised in HSBC account … in respect of legal work performed, services provided and disbursements incurred by them in and in connection with the within proceedings and the associated Federal and High Court appeals, plus interest accruing on that amount from 14 March 2004.’

Order 1 of the consent orders made by me on 16 April 2004 was:

‘By consent and without prejudice to paragraph 5 of the Order made on 18 December 2003, the Court declares that the lien or liens referred to in paragraph 4 of the Order made by the Court in this proceeding on 18 December 2003 may be enforced and the lien or liens are not subject to any interest in the fund asserted by or on behalf of Westpac Banking Corporation by reason of the issues referred to in the trial on 2 October 2003.’

4                     Those orders have been sealed. 

5                     By Notice of Motion dated 12 August 2004, with accompanying affidavit, the applicant has sought an order that Townsend and Reynolds Pty Ltd be joined as a cross-respondent and a declaration that RISU Nominees Pty Ltd and Townsend and Reynolds Pty Ltd are not entitled to receive any payment for legal services.  Other orders are also sought, apparently thought to be consequential upon the making of any such declaration.  The basis for seeking these orders appears to be that neither of those companies holds a practising certificate, with the consequence, it is apparently to be argued, that the contacts upon which those companies are said to claim fees for legal services are invalid and unenforceable.

6                     Upon the filing of that Notice of Motion, my chambers was contacted to seek a date for hearing of the Notice of Motion.  The Notice of Motion was then brought to my attention.

7                     After considering what I was informed about the Notice of Motion (I was then interstate) I formed the view (and it remains my view) that even if the applicants were successful on the Notice of Motion, then someone – and maybe the applicants and perhaps their solicitors – could well be liable for indemnity costs.

8                     The Notice of Motion, on its face, seeks to raise a new issue that should have been raised at some earlier time.  That appears obvious on its face, given the history of these proceedings.  Even if the applicant’s are successful simply as a matter of procedure – for example, if for some reason or other, the wrong party is named in the orders made by the Court – then that is an issue that should have been resolved by agreement between the parties.  Pursuing such an issue as a contentious matter may well have cost implications.

9                     Of course, if the applicants were unsuccessful on the Notice of Motion then, given the history already referred to, an application for indemnity costs could at least be expected.  I note that my previous reasons related to two such applications in the past.  Again, in the circumstances, the lawyers might well be liable for any such costs.

10                  Having formed these views I asked my personal assistant to contact the solicitors for the applicant to advise them that on the hearing of that Notice of Motion the solicitors should be prepared to put submissions as to why solicitors should not be liable in costs, including indemnity costs.

11                  I also asked my personal assistant to convey to the applicants’ solicitors my view that this application provided further evidence that this litigation has been going on for too long and the parties have ‘lost the plot’.  That is my view.  I have expressed it many times to the parties and/or their legal advisers, both in chambers and in open court, although usually more tactfully.  I hasten to point out that my view is not limited to the applicants’ position, nor is it related to any specific person; it is a generic comment about the nature of this litigation as it has progressed not only before me but before von Doussa J before that.

12                  The applicants have now filed a Notice of Motion applying for me to disqualify myself for perceived bias.  The basis of that application is the communications between my personal assistant and the applicants’ solicitors discussed in more detail below.

13                  The principles in relation to an application that I disqualify myself for perceived bias are well summarised in Southern Equities Corporation Ltd (In Liq) v Bond (2000) 78 SASR 339.  It is unnecessary to repeat them.  (I should say however that I would reserve my position on whether the proper application of those principles on the facts of that case necessarily result in the conclusion reached by the majority in that case.  However, that is not an issue that needs to be considered in this matter, given that the facts are obviously different).

14                  Mr O’Callaghan SC, who appeared for the applicants on the Notice of Motion, argued that a reasonable bystander would have a reasonable apprehension that I had prejudged the matter.  He relied upon an affidavit made by his instructing solicitor on 17 August 2004.  That affidavit annexed a note of the message actually passed on at my request:

‘Notice of Motion has been listed for 19^th.  Selway J has said that S & G had better be ready to make submissions regarding the indemnity costs.

Selway J has also said that he feels that this had been going on for too long and that it appears the parties are losing the plot.’

15                  Mr O’Callaghan relied particularly upon a further conversation between the solicitor and my personal assistant.  That conversation is deposed to in par 4 of the affidavit of the solicitor.  The solicitor deposes that at about 10:55 am on 13 August 2004, he had a conversation with my personal assistant to the following effect:

‘I said:       “I just wanted to clarify the message that you were conveying on behalf of His Honour in relation to costs.”

She said:    “Yes.”

I said:         “So His Honour wants us to make submissions as to why indemnity costs should not be paid in relation to the notice of motion which we have just filed.”

She said:    “Yes, why shouldn’t the lawyers pay costs on the notice of motion.”

I said:         “Why shouldn’t the lawyers pay the costs?”

She said:    “Yes.”

I said          “OK.”

She said:    “I am just passing on a message from His Honour.”

16                  Mr O’Callaghan SC has submitted to me that the reasonable bystander would read that exchange between the solicitor and my personal assistant, assuming it to be accurate, as meaning that I had formed a view that the lawyers instructing him should pay indemnity costs.  Plainly enough, if the reasonable bystander had a reasonable apprehension on all the information that I had prejudged that issue, then I should disqualify myself.

17                  My own view is that the exchange as recorded in the affidavit would not be understood in that way.  In my view the reasonable bystander would read the words “the lawyers” generally.  This is particularly so when the reasonable bystander is assumed to have a knowledge of the context and the background, including that this was a discussion between chambers and a lawyer.

18                  In any event, the reasonable bystander is informed not just by what is in the instructing solicitor’s affidavit but by all the information that is available, including what I myself say.  As to that, I say that my personal assistant was authorised to say that the lawyers for the applicant should come to court on this occasion prepared to put submissions on whether indemnity costs should be payable, including by them.  My personal assistant was not authorised to say that I had determined as a fact or as a matter of law that those particular solicitors were liable for indemnity costs.  Even if the conversation as deposed to is understood as meaning that I had prejudged the matter, a reasonable bystander, in determining whether he or she had a reasonable apprehension of prejudgment, would take account of what I have explained was to be conveyed by my personal assistant.  Taking that into account, the reasonable bystander would not have a reasonable apprehension that I had prejudged any relevant matter.

19                  As to whether I have, in fact, prejudged whether indemnity costs should be paid and, if so, by whom, I have not.  In respect of indemnity costs all I have done is noted the obvious consequence, it seems to me, of the Notice of Motion – a consequence I would have thought was obvious to anyone reasonably informed of the background of the case.  Whether indemnity costs should be paid and if so by whom remains to be determined.  Plainly enough, however, the parties and their solicitors are at risk and that includes the applicant and the applicants’ lawyers.

20                  As to the comment about the parties ‘losing the plot’, this Court has been dealing with proceedings for more than 18 months relating to the entitlement to legal fees.  The Court has made two consent orders.  The orders have been sealed.  It now has before it a Notice of Motion the effect of which is that those proceedings were either unnecessary or flawed.  As to whether I have formed a view that the parties have ‘lost the plot’, I have formed that view.  This does not mean that I cannot bring an independent mind to any issue that arises.  It certainly does not mean that an independent person, fully aware of the facts, would think me unable to reach an impartial judgment.  In my view, any reasonable person aware of all the facts of this litigation would necessarily reach exactly the same conclusion that the litigation has been going for too long and that the parties have ‘lost the plot.’

21                  True it is that communications of this sort would normally be made in open court.  However, this Court – at least in this registry – operates a docket system and, within that context, cases are managed in chambers and by Judges.  If parties are taking steps which may have significantly adverse consequences both to the proceedings and to their own position, there is no reason in principle why that possibility should not be brought to attention by communication from chambers.  Plainly enough, it is still for the party to run its own case.  I note in this instance, apart from the application that I disqualify myself, the applicant appears not to have been moved by any comments from my chambers.

22                  Finally, there is the question of whether I should decline to sit on a discretionary basis.  In that regard, I refer to the comments of the High Court in Ebner v Official Trustee (2000) 205 CLR 337 at par 20.  The difficulty in this matter is that, given the history and the background, it is inappropriate to pass this chalice to someone else.

23                  Having regard to all of the above matters, I decline to disqualify myself.

Associate:

Dated:              27 August 2004